Sri Lanka shares hit near 8-mth low on foreign fund outflow

Reuters Staff

COLOMBO Nov 29 (Reuters) - Sri Lankan shares fell on
Tuesday for the third straight session to end at a near
eight-month low as foreign investors trimmed their exposure to
the island nation's risky assets amid concerns over budget tax
proposals.

The Colombo stock index ended 0.11 percent down at
6,231.87, its lowest close since April 7. The bourse lost 1.17
percent last week, marking its third straight weekly fall.

A proposed hike in various taxes and fees would reduce
disposable income and challenge consumption-led growth, analysts
said.

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"Investors are concerned over the current uncertainty and
they are worried over the sustainability of the rates given the
current economic uncertainty," said Dimantha Mathew, head of
research at First Capital Equities (Pvt) Ltd.

The government aims to boost its 2017 tax revenue by 27
percent to 1.82 trillion rupees year-on-year and meet a
commitment given to the International Monetary Fund in return
for a $1.5 billion loan in May.

The market shrugged off the central bank's key monetary
policy decision on Tuesday to keep rates unchanged. Brokers said
investors are concerned about the sustainability of the rates.

At the post-monetary policy media briefing, central bank
Governor Indrajith Coomaraswamy said aggressive monetary policy
tightening by the U.S. Federal Reserve will have an impact on
the foreign outflow.

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Turnover was 1.01 billion rupees ($6.78 million), more than
this year's daily average of 695.1 million rupees.

Foreign investors sold a net 295.8 million rupees worth of
shares on Tuesday, extending the year-to-date net foreign
selling to 1.68 billion rupees.